A warmer shift in the weather data overnight saw natural gas futures trading slightly lower early Friday. The November Nymex contract was down 2.1 cents to $2.295/MMBtu shortly after 8:30 a.m. ET.
Overnight guidance trended warmer, with both the European and American models dropping gas-weighted degree days from the outlook compared to model runs from Thursday afternoon, according to Bespoke Weather Services.
“The change in both models was to slow and slightly weaken the big cold blast in the six to 10 day period, though the level of cold remains very strong, especially in the central U.S. and down into Texas,” the forecaster said. “Models still weaken the cold pattern in the 11-15 day as they show” negative North Atlantic Oscillation blocking “fading away,” and the American model is “still the most adamant about such a change.
“The Pacific side of the pattern still suggests some cold risks in the northern/central U.S., however, so we may still see model runs jump around some in the medium range,” Bespoke said. “We do still favor moderation in terms of the national demand picture after the first week of November, in agreement with the general trend in the current modeling.”
Meanwhile, the market early Friday was continuing to digest an Energy Information Administration (EIA) storage report that fell well within the range of expectations but indicated continued looseness in the supply/demand balance.
The EIA on Thursday reported an 87 Bcf injection into natural gas storage inventories for the week ending Oct. 18, much higher than last year’s 62 Bcf build and the 73 Bcf five-year average. Total working gas in storage as of Oct. 18 stood at 3,606 Bcf, 519 Bcf above year-ago levels and 28 Bcf above the five-year average, according to EIA.
The 87 Bcf injection indicates the market was about 5.6 Bcf/d looser than the five-year average when compared to degree days and normal seasonality, Genscape Inc. senior natural gas analyst Eric Fell said.
“The last three weeks have been very loose (more than 5 Bcf/d loose on average), with injections over that time frame totaling 49 Bcf higher than the five-year average, despite the fact that degree days over the last three weeks have been 39 more than the five-year average,” Fell said.
“We saw three comparably loose storage weeks back in late March/early April, but Henry Hub cash averaged $2.69 over those three weeks...while cash has averaged $2.26 over the last three storage weeks.”
December crude oil futures were trading 14 cents lower at $56.09/bbl shortly after 8:30 a.m. ET, while November RBOB gasoline was trading close to even at $1.6640/gal.